Morgan Stanley named Visa Inc (NYSE:V) its top stock pick in the payments sector for 2025, given its strong growth prospects from international travel, value-added services, and new payment flows.

The brokerage remains overweight on Visa and Mastercard (NYSE:MA), favouring their defensible business models, strong operating leverage, and limited competition.

“We are adding V as our Top Pick into 2025 given attractive valuation, benefits from travel + value added services, easing regulatory scrutiny, and favorable tactical trading dynamics,” analyst said.

Morgan Stanley (NYSE:MS) expects both companies to deliver double-digit earnings growth with potential for modest valuation expansion.

Visa's valuation appears particularly attractive on a growth-adjusted basis compared to consumer peers, the note said. Morgan Stanley also highlighted reduced regulatory risks and a potential benefit from an uptick in institutional ownership as key drivers for the stock.

Investor sentiment that Visa stock is over-owned relative to the S&P 500 may be misplaced, Morgan Stanley said, noting Visa's current ownership levels remain below historical averages.

The brokerage expects near-term tailwinds for Visa from increasing international travel and a possible reversal of its recent inverse correlation with bank outperformance.

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